Why Choose a Monthly Payment Plan for your Membership Organisation
Discover the benefits of opting for a monthly payment plan for your membership organisation and learn how to switch easily and effectively. Tips & advice.
What are membership organisations and how they operate
A membership organisation is an association or group of people who come together around a shared interest, goal, profession, industry, or hobby. In exchange for paying a membership or subscription fee, members receive various benefits, such as newsletters, resources, free access or early registration to events, and discounts for activities. To retain members, it is essential to understand their needs and offer services and perks that enhance your community and attract more individuals. Traditionally, membership fees are collected annually via invoice, providing the organisation with a steady source of income. However, this payment method has become a problem for many organisations that handle hundreds and sometimes thousands of members. The use of invoices leads to a higher churn (loss of members), especially since XXI-century members request more convenient payment methods.
Benefits of opting for a monthly payment plan for your membership organisation
In today’s automatic, subscription-based society, many customers have gotten used to monthly payment schemes and opt for them whenever possible. This trend is now being applied to membership organisations that are looking to retain their members and stay relevant.
Membership organisations have started to adopt monthly payment plans due to the many benefits that this payment method offers. Switching from an annual payment cycle to a monthly one can be a great opportunity to boost your organisation and attract new members. Here are some of the advantages of opting for a monthly membership payment plan for your organisation:
1. Monthly membership subscriptions are more affordable
You might have come across an offer where a business or organisation offered annual and monthly payments. When added up, monthly memberships normally are a bit more costly (around 15-20%) than an annual subscription but members often prefer to spread the cost over 12 months rather than pay a lump sum up-front. They see it as a smaller commitment level that has a lower impact on their bank account.
What's in it for you?
As an organisation, you can benefit from having a regular monthly source of income, unlike annual membership subscriptions, which might all come in at once, leaving you with several months without any money coming in.
2. Higher retention with automatic withdrawals for membership organisation fees
Membership organisations look forward to annual renewals as it's the moment when cash is coming in. But bear in mind that some of your members may be looking forward to this moment even more than you – so that they can cancel their membership.
By adopting a monthly recurring payment plan, your organisation can lower churn rates! The smaller sums automatically withdrawn from your members' bank accounts have less of an impact than big lump sums, making inactive members more willing to stick to the membership for a few months longer; for example, golf organisation members may be waiting for better weather to go back and play.
Monthly recurring payments can also ensure automatic membership renewal, and customers only need to take action if they want to cancel their subscriptions. This often leads to the membership being renewed for a longer time than with an annual payment cycle.
3. Attract more members to your organisation with a monthly membership plan
Netflix subscriptions and gym memberships are Gen-Z and Millennials' bread and butter. A monthly membership plan is the preferred payment method for millennials and Gen-Z members who are used to subscription-based services like Netflix and gym memberships. Young generations demand convenience and seamless payment methods, which is why offering monthly payment plans is a way of attracting young members.
4. Monthly memberships for easier refund handling
Imagine that one of your organisation members reaches out to cancel their membership and request a refund. It may or may not be possible, depending on your cancellation policy and terms and conditions. However, if according to your T&Cs, a member is eligible for a refund, a monthly membership plan makes refund handling more comfortable and less complicated, which can have a great impact on the relationship between you and your members. Rather than refunding half of their annual fee, it is much easier to refund a month's fee if a member cancels their membership. This can help ensure member satisfaction and increase the chances of them coming back in a few months.
Things to consider when switching from an annual to a monthly payment plan for your membership organisation
Switching from an annual to a monthly payment cycle can bring a lot of benefits but you must plan the switch strategy. First of all, don't just remove the annual membership option but rather introduce the monthly payment plan as a powerful and beneficial alternative. Here are some other things you should bear in mind:
1. Switch from paper to digital invoices to lower costs and lower environmental impact
If your membership organisation currently uses paper invoices as a payment method, the switch from annual to monthly payments would result in 12 times more paper per member, which in turn would lead to an increase in cost and environmental impact. Instead, make sure you have each member's correct email address and send digital invoices. By updating your member database with correct information you can get to improve member communications.
2. Member communication is key
Inform members of the upcoming changes and how they will affect their membership. Make sure you explain the benefits of monthly payments and how they can improve the overall member experience.
3. Opt for digital payment processing
If your administrative and payment handling processes are manual, a switch to monthly payment plans would significantly increase the workload. This is where recurring payment methods will be your lifesaver, as they eliminate the invoice-handling process and minimise your workload.
By opting for Waytobill’s Digital Autogiro (or other kinds of Nordic direct debit, for example, the Norwegian AvtaleGiro), you can digitalise payment processing and say goodbye to paper invoices.
Keen to find out more about Digital Autogiro? Download free infographic to learn more about this payment method.
Why offer direct debit as a payment method? According to European Central Bank, in 2022, the large majority of recurring payments were made using direct debit.
4. Establish clear cancellation policies
As we've mentioned in one of the previous points, member communication is key. Therefore, establishing clear and transparent cancellation policies and communicating them to your members is crucial for a positive member experience. Make sure your organisation members understand the terms and conditions for the monthly payment plan and what happens if they choose to cancel their membership.
5. Pricing strategy for your monthly membership plan and member retention
Consider your pricing strategy and determine how monthly payments will be more affordable for your organisation members. Decide on the appropriate price points that are competitive and have the potential to attract new members who may have been reluctant in the past to opt for an annual membership. It's also important to adjust your monthly pricing so that it can help you retain members and increase their lifetime value. Offering incentives or benefits that encourage members to stay with your organisation or promote it to their peers is a great and powerful strategy.
Switch from an annual to a monthly payment plan for your membership organisation
There are a lot of benefits connected to switching your subscription business to a monthly payment cycle, for example, it'd be easier to sell your membership and get potential customers to sign up. With access to a payment provider, you’ll get rid of paper invoices, your workload will decrease, and the digitalisation that comes with the partnership will solve the cost and environmental issues.
